- Hryvnia Bond Fan Club Expands
- Ukrposhta’s Maidan HQ: A Hotel?
- Flights Return to Uzhgorod June 3
- Ukraine Slaps Import Duties on Russian Imports
- Exports to EU Grow
- Half of Rail Stations Generate 2% of Revenue
- FT: Kyiv, Lviv Are Cost Effective “Smart Locations”
- UIA Doubles Flights to Canada
- Kyiv to Start Towing Illegally Parked Cars
- IMF Arrives today
- Exports Through Sea Ports up 20%, River Traffic up 60%
- Slovakia Upgrades Rail Links with Ukraine
- USDA: Ukraine To Match Last Year’s Record Grain Harvest
- Marketers Needed to Promote Processed Food on World Markets
- China-Ukraine Jets Fly Full
By using presidential powers, Zelenskiy plans to take “very concrete steps” in coming days to fight corruption, Oleksandr Danylyuk, his chief economic advisor, told Concorde Capital’s international investment conference Thursday. These include: relaunching the National Agency on Corruption Prevention; making the new High Anti-Corruption Court “operational as soon as possible”; winning Rada approval for a new law on criminal responsibility for illicit enrichment; and “protecting whistleblowers on corruption.”
DTEK’s energy holding has purchased controlling interests in two of Ukraine’s largest power generation companies, Odesaoblenergo and Kyivoblenergo, the company tells Interfax-Ukraine. The companies were bought from VS Energy International NV.
Naftogaz sees September as the earlier date for going into the Eurobond market, Kobolyev told the Concorde Capital conference. First, the state energy company wants to see the level of demand and prices for a Eurobond launch planned by the Finance Ministry by mid-June. Noting high foreign demand for hryvnia treasury bonds, Kobolyev said local bonds could be a good source of financing.
The recent jump in foreign purchases of hryvnia bonds also has caught the eye of Ukrzaliznytsia, the state railroad. “We are seeing a high level of interest, a lot of activity on this instrument from the Ukrainian and international players,” Yevhen Kravtsov, CEO of UZ, said at the Concorde conference. Referring to issuing Eurobonds and borrowing money from EBRD and EIB, he added: “Our strategy is to use such a mix and continue to replenish our portfolio with hryvnia instruments.”
The International Finance Corporation carried out its debut issue of hryvnia bonds, denominated at 15.75% per annum, to support its operations in Ukraine. The bonds were issued Monday, redeemable in 2020, said Jason Brett Pellmar, IFC manager for Ukraine, Moldova and Belarus. IFC, a World Bank unit, has a AAA rating.
Ukraine’s Central Post Office, a Stalinist landmark on Kyiv’s Maidan, should be sold, possibly for use as a hotel, recommends Igor Smiliansky, director of Ukrposhta. Noting that he rents out street level space in the building to Rozetka, the e-commerce company, and to Pf Retail LLC, a Vodafone Ukraine unit, he says the historic post office wastes space and slows mail delivery when demonstrations block the Maidan. Offering opportunities to real estate developers, he says post office sorting centers should move from traditional locations near rail stations to suburban locations near ring roads. Near train stations, “you can open wonderful offices and hotels – there is absolutely no need for Ukrposhta trucks to go there and clog traffic,” he told reporters Thursday while presenting the state postal company’s annual report.
In June 3, Motor Sich Airlines resumes Kyiv-Uzhgorod flights, says Mikhail Rivis, head of Zakarpattia’s regional council, according to Mukachevo.net. The flights are to be direct, on Mondays, Wednesdays and Fridays, and coordinated with Motor Sich flights from Kyiv Sikorsky to Odesa. With an eye to the start of the tourist season, the Zakarpattia council decided on an unspecified “mechanism of financial support for the flight.”
A four-year, $90 million road safety program is start this summer in Kyiv. Features are: more traffic lights and crackdowns on speeders, drunk drivers, and driving without seatbelts. Coping poorly with a growing number of cars, the capital has seen a 48% increase in the number of road traffic deaths since 2016, the city reports. Separately, the Rada voted Thursday to delay for 90 days, until Aug. 24, the imposition of fines on the owners of illegally imported cars from the EU. Fines will be as high as $6,400.
Accelerating Ukraine economic divorce from Russia, Ukraine imposes a new duty on most imports from Russia, starting Aug. 1. The unspecified duty, levied as a percentage of value, will apply to all imports, but five exceptions considered strategic: anthracite coal, coking coal, gasoline, liquefied gas and pharmaceutical drugs. In addition, the Cabinet of Ministers banned all imports of cement and plywood from Russia – $37 million of goods last year. The Economic Development and Trade Ministry backs a wider import ban on Russian industrial goods, fertilizers, food and vehicles. Prime Minister Groisman told the Cabinet: “We will impose an embargo on goods that we produce today or that we can replace.” The new duty and bans come as Ukraine’s trade deficit with Russia grew last year to $4.4 billion, 38% of Ukraine’s overall trade deficit. Revenue generated from the new import duties are to go to a new fund for “import substitution” investments, Ukraine’s Cabinet of Ministers said. The decision also comes two weeks before Russia imposes a series of restrictions on exports – largely energy products – to Ukraine.
During the first quarter of this year, Ukraine’s overall trade deficit increased by 13%, compared to Q1 2018, to $1.5 billion, the State Statistics Service reported Wednesday. Exports were up 7.4%, to $12.3 billion. Imports were up 7.9%, to $13.7 billion. The EU took 43% of Ukraine’s exports of goods and one third of its exports of services in the first quarter, the State Statistics Service reported Wednesday.
Sales of food to the EU increased by 24% during the first quarter. Exports hit $1.9 billion, giving Ukraine a surplus of $1.1 billion, according to Mykola Pugachev, deputy director of the Institute of Agrarian Economics. By April 1, Ukraine had fully used its annual EU quotas for honey, corn, sugar, apple juice and grape juice. Separately, Hugues Mingarelli, EU ambassador to Ukraine, told a conference in Kyiv on Wednesday: “I hope that there is an opportunity to discuss the issue of quotas, especially in agriculture.”
“European farmers alarmed over EBRD’s loan to MHP” headlines GlobalMeatNews about European Bank for Reconstruction and Development approval of a €100m loan to the Kyiv-based poultry giant to acquire Slovenian poultry processor Perutnina Ptuj. European poultry farmers complain to Brussels that MHP is using a legal loophole to flood the EU with their breast fillets. MHP says its exports were up 47% Q1-o-Q1, to 93,000 tons. It does not say how much went to the EU.
Half of Ukrzaliznytsia’s stations generate only 2% of its revenue, a rail executive says as part of a campaign to pressure local governments to save 300 underperforming freight loading stations. About 46% percent of the network’s 1,700 stations and halts cost $300 million to service, but generate only $20 million in revenue, says Andriy Ryazantsev, finance director of the state railroad. The world’s seventh largest rail freight transporter, Ukrzaliznytsia has 23,000 km of track.
Twenty EU-Ukraine projects in the Danube river corridor were approved by the Cabinet of Ministers Wednesday under the EU’s Danube Transnational Program. With €5 million in seed money, the projects in transportation infrastructure, energy, environment and tourism are to benefit communities of Zakarpattia, Ivano-Frankivsk, Chernivtsi and Odesa regions.
In a worldwide ranking of ‘cost effective cities’ for foreign investment, Kyiv came in fifth and Lviv came in eighth, according to fDi Intelligence, a Financial Times unit. In this annual ‘smart locations of the future’ survey, the two Ukrainian cities made the top 10 ranking in the category of ‘cost effectiveness.’ Kyiv came in after Skopje, Sofia, Kaunas and Gdansk, rated on such criteria as: cost per square meter of class A office space, wages of skilled workers, price of hotel rooms, tax rate on profits, cost of setting up a company, registering property rights, and connecting to electricity grids.
President-elect Zelenskiy told executives of foreign banks Tuesday that Ukraine’s macroeconomic stability depends on an independent central bank, continued cooperation with the IMF and following sound financial policies, his press service reports. Judicial reform and protection of the rights of investors and creditors are cornerstones for economic growth and attracting foreign investment, he said. Talking to the bank executives, largely Ukrainians, he said: “Reducing interest rates will be a boost to economic growth. For now people are scared and do not trust the banks.” Joining Zelenskiy were: Aivaras Abromavicius, Oleksandr Danylyuk, Andriy Bogdan, Ivan Bakanov, Victoria Strakhov. Banks participating were: Alfa Bank, Citibank, Credit Agricole, Credit West, Deutsche Bank, Piraeus, Pravex Bank Intesa Sanpaolo, ProCredit Bank, Raiffeisen Bank Aval, SEB, and Ukrsibbank BNP Paribas.
Lviv is taking steps to win a €50 million loan to buy 100 electric trolley buses and to modernize the city’s 210 km of electrified routes for trams and trolley buses. On Monday, the Lviv City Council a letter of intent to take the loan from the World Bank’s International Finance Corporation on concessional terms – an interest rate around 5%, 13-year repayment period, and a 3-year grace period. A tender for the buses is to made public later this year, with the goal of receiving buses next year. The City Council calls the loan “one of the largest in the history of attracting funds from an international institution to the development of the city.”
UIA starts to double the frequency of its Kyiv-Toronto flights, to four a week. A third Wednesday flight started last week. A fourth, Thursday flight, starts on June 13. Eying profit in long haul routes, UIA President Yuri Miroshnikov tells avianews that later this year, he would like to start a direct flight from Kyiv Boryspil to Guanzhou or Shanghai.
To ease train travel to Ukrzaliznytsia’s new top international destination, tickets for all trains to Poland may be bought online, starting today, Yevhen Kravtsov, the railroad’s CEO writes on Facebook. The railroad also is working on online bookings for auto transportation by train. Meanwhile, passengers traveling to CIS countries, including Russia, may pay for tickets on line, but they have to pick up paper tickets at rail stations.
To change the face of Kyiv from ‘post Soviet’ to European, Mayor Klitschko plans to start towing illegally parked cars next month. A team of parking inspectors has been hired and trained, he tells Interfax-Ukraine. “We will tighten the screws on parking issues – it will be expensive to park illegally, especially in the city center,” said the Mayor of a city where drivers enjoy free parking on sidewalks. Without fines and towing, public garages sit half empty. To cut the number of cars going into the center, Kyiv is building parking lots near key metro stations.
The IMF review mission arrives in Kyiv today and will work here for two weeks, says Mikhail Dovbenko, a Rada finance and banking committee deputy chairman. A favorable review should lead to disbursement this summer of a $1.3 billion loan tranche from the IMF – and unlock more loans on concessional terms from other international financial institutions.
Exports through Ukraine’s ports were up by 20% from January to April, compared to the first four months of last year. Imports and transit cargo were down, making for an overall cargo increase of 12%, to 49 million tons. Containers were up 19%, iron ore up by one quarter and grain up by one third. Confirming the trend toward bigger ships, the number of cargo ships docking at Ukrainian ports was down 1%, to 3,787. Winners were: Yuzhne, with cargo handling up 20% to 15.5 million tons; Mykolaiv up 20% to 10.7 million tons; and Chornomork up 21% to 8.4 million tons. Losers were: Odesa up only 5.5% to 8 million tons, slipping to fourth place nationwide. The two Azov seaports saw cargo diverted to Mykolaiv to avoid delays caused by Russian ‘inspections’ of ships serving Ukrainian ports.
Dnipro river cargo is up 60% through April, compared to the same period last year. The surge in cargo, to 2 million tons, is due to three factors: a mild weather allowing an early start to the river shipping season; last year’s bumper grain harvest straining trucks and trains; and Nibulon’s investment in river ports and barges. Grain cargoes nearly tripled, to 1 million tons. Construction cargo and metal products doubled.
In the latest use of EU gauge tracks dating back to the Hapsburg empire, Slovakia and Ukraine start direct service June 9 between Košice, Slovakia and Mukachevo, Zakarpattia. Running twice a day along a 146 km route, the trains will cut travel time by 40%, to four hours, reports Britain’s Railway Gazette. The trains will be jointly operated by ZSSK, Slovakia’s state passenger rail company, and Ukrzaliznytsia. Six months ago, using the same EU gauge tracks, UZ started a dedicated Mukachevo-Budapest train.
Separately, after a seven-year break, ZSSK restores service June 9 to a 26 km local route in eastern Slovakia. Running four times a day from Bánovce nad Ondavou, the trains will end at Veľké Kapušany, five km west of Ukraine’s border, near Uzhgorod.
Former Finance Minister and current Zelenskiy advisor Oleksandr Danylyuk tells Liga.net that top priorities of Zelenskiy’s first 100 days will be to “restart the anti-corruption bodies” and “restart the recruitment and certification of judges.” Other priorities will be to reform the State Security Service, or SBU, to eliminate the Tax Police, and to create the Financial Investigation Service.
Judging by spring plantings and favorable weather, Ukraine will export slightly more grain next year than its forecast record 50.4 million tons of exports for this year, predicts the US Department of Agriculture. Bolstered by a record harvest last fall, Ukraine exported 43.5 million tons of grain and legumes as of Friday – 25% more than this time last year. The marketing year ends at the end of next month.
Looking at this year’s harvest, the USDA predicts that wheat exports will be up 15%, to 19 million tons. Corn exports will recede 8.5% from their record level, to 27 million tons next year. Barley exports will be 4.5 million tons, almost the same as this year. Overall, grain exports will be 50.7 million tons, 300,000 tons over this year. The harvest will slightly surpass last year’s record, hitting 72.1 million tons, up 3% over last year, the USDA says.
With the EU predicting its lowest harvest of rapeseed in five years, Ukraine’s strong crop could fill the gap, Bloomberg reports. Known for fields of bright yellow flowers at this time of year, rapeseed is crushed for cooking oil and marketed as canola. The EU has cut its official production forecast to 19.2 million tons. But one British oilseeds trader interviewed by Bloomberg predicts EU production will fall below 18 million tons. Ukraine and Australia will fill the EU production shortfall, the USDA predicts.
To shift from global breadbasket to global supermarket, Ukraine has to train world class marketers and open its promised Export Credit Agency to provide risk insurance for processed food exports, according to analysis by Yelizaveta Dorontseva of UNIAN. Last year, commodities accounted for 80% of Ukraine’s $19 billion in food exports, according to the Ukrainian Club of Agrarian Business.
Butter, honey, and soybean oil offer the best prospects for export as processed, pre-packaged products. With food exports growing every year since 2015, Ukraine has done a good job in diversifying from its historic reliance on Russia, UNIAN says. Since 2014, Ukraine’s food exports to China have increased nearly seven times. Last year, Ukrainian producers opened 85 new foreign markets for their products.
Oleh Bakhmatiuk owner of Avangard Holding, one of Ukraine’s largest egg producers, tells UNIAN that after losing assets in Crimea, Donetsk and Luhansk in 2014: “We decided to reorient ourselves to foreign markets. We export our products to Iraq, the UAE, Qatar, Saudi Arabia, Bahrain, Kuwait, and Hong Kong. Now we plan to enter the market of Singapore, and about 20 African countries.”
UIA’s Kyiv-Beijing flight makes a 4-hour detour around Russia, costing Ukraine’s flag carrier $120,000 extra for each flight, says Pavel Ryakivin, general director of Kyiv Boryspil, UIA’s hub. Infrastructure Minister Volodymyr Omelyan tells Interfax-Ukraine he is looking for a ‘non-discriminatory mechanism’ to compensate Ukrainian carriers hurt by Russia’s overflight ban.
The daily Kyiv-Beijing flight run at 95% occupancy and SkyUp’s new flight from Kyiv Boryspil to China’s Hainan resort island runs at 97% occupancy, Omelyan’s deputy, Viktor Dovhan, writes in the Kyiv Post. He says China-Ukraine air passengers traffic hit 200,000 last year, double the level of 2015. With Chinese now eligible for Ukraine’s e-visas, air passenger growth with Ukraine is expected to keep growing at 25% a year.
The original English version is from our partner UBN – Ukraine Business News. For more information and news archive, go to: www.ubn.news.